Marquez Corporation Comparative Balance Sheets December 31 2020 2019 Cash 15,200 17,700 Accounts receivable 25,200 22,300...

Marquez Corporation Comparative Balance Sheets December 31 2020 2019 Cash 15,200 17,700 Accounts receivable 25,200 22,300 Investments 20,000 16,000 Land 40,000 50,000 Equipment 20,000 20,000 Accumulated depreciation—equipment (14,000) (10,000) Total Assets 106,400 116,000 Accounts payable 14,600 11,100 Bonds payable 10,000 30,000 Common stock 50,000 45,000 Retained earnings 31,800 29,900 Total Liabilities and Stockholders' Equity 106,400 116,000 Additional information: Net income was $20,000. Dividends declared and paid were $18,100. Land that originally cost $10,000 was sold for $4,500. No non-cash investing and financing activities occurred during 2020. Prepare the company’s statement of cash flows for 2020 applying the indirect method What was Net cash provided by operating activities? What is was the Net cash used or provided by investing activities? What is the net cash provided or used by financing activities? What is the net increase in cash? What is the cash balance at end of the period? What is the free cash flow using the information in Question 1?

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Solution:

Marquez Corporation
Statement of Cash Flows
For year ended Dec 31, 2020
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income		$20,000.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$4,000.00
Loss on sale of land	$5,500.00
Increase in accounts receivables ($25,200 - $22,300)	-$2,900.00
Increase in accounts payable ($14,600 - $11,100)	$3,500.00	$10,100.00

Net Cash provided by operating activities		$30,100.00

Cash Flow from Investing Activities:
Proceed from sale of land	$4,500.00
Purchase of investment	-$4,000.00

Net Cash used in Investing activities		$500.00

Cash Flow from Financing Activities:
Repayment of bond	-$20,000.00
Dividend Paid	-$18,100.00
Proceed from issue of common stock	$5,000.00

Net Cash Provided by financing activities		-$33,100.00

Net Increase / (Decrease) in Cash		-$2,500.00
Cash balance at beginning of year		$17,700.00

Cash balance at end of year		$15,200.00

Free cash flow = Operating cash flow - Capital expenditure - Dividend paid

= $30,100 - $4,000 - $18,100 = $8,000

ekkarill92 answered 1 year ago

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